An approval letter is any letter written to grant official approval of a request. Approval letters are typically written in response to requests for approval regarding employee days off, business expenses, building projects and financing.
One specific and common type of approval letter is the pre-approval letter provided by a mortgage lender to a prospective home buyer shopping for a new home. A pre-approval letter is issued after a mortgage lender has done due diligence to confirm the home buyer's financial wherewithal to make the purchase. Typically, a pre-approval letter states the amount the prospective buyer is approved to borrow. A pre-approval letter carries more weight than does a prequalification letter when making an offer on a house.